32

Cleins C. Coughlinand Geoffrey E. Wood

Cletus C. Coughlin is a senior economist at the Federal ReserveBank of St. Louis and Geoffrey E. Wood is a professor ofeconomics at City UniVersity, London. Thomas A. Pollmann pro-vided research assistance.

An Introduction to Non-TariffBarriers to Trade

ESTRICTIONS on international trade,primarily in the form of non-tariff barriers,have multiplied rapidly in the 1980s.’ TheJapanese, for example, began restrictingautomobile exports to the United States in 1981.One year later, the U.S. government, as part ofits ongoing intervention in the sugar market,

imposed quotas on sugar imports.

The increasing use of protectionist tradepolicies raises national as well as internationalissues. As many observers have noted, interna-

tional trade restrictions generally have costlynational consequences.5 The net benefits re-ceived by protected domestic producers (that is,

benefits reduced by lobbying costs) tend to beoutweighed by the losses associated with ex-cessive production and restricted consumptionof the protected goods. Protectionist tradepolicies also cause foreign adjustments in pro-

duction and consumption that risks retaliationby the affected country.

As a type of protectionist policy, non-tariffbarriers produce the general consequences iden-tified above; however, there are numerousreasons, besides their proliferation, to focus at-tention solely on non-tariff barriers!’ Non-tariffbarriers encompass a wide range of specificmeasures, many of whose effects are not easilymeasured. For example, the effects of a govern-ment procurement process that is biased towarddomestic producers are difficult to quantify. Inaddition, many non-tariff barriers discriminateamong a country’s trading partners.

This discrimination violates the most-favored-

nation principle, a cornerstone of the GeneralAgreement on Tariffs and Trade (GATT), themultinational agreement governing internationaltrade. Not only does the most-favored-nation

‘See Page (1987) for a general discussion indicating thatthe proliferation of trade restrictions in recent years hastaken the form of non-tariff, as opposed to tariff, barriers.A recent Congressional Budget Office study (1987) notesthat the average tariff rate for most developed countries isless than 5 percent. There is no evidence of rising tariffrates or coverage. For example, U.S. tariff revenue as apercentage of total imports has changed very little be-tween 1975 (3.9%) and 1986 (3.6%), See the Statistical

Abstract of the United States (various editions) for thefigures for other years.

2For example, see Coughlin et al. (1988).tmSee chapter 1 in Laird and Yeats (forthcoming) for adiscussion of the policy issues raised by non-tariff barriers.

FEDERAL RESERVE BANK OF ST. LOUIS

33

principle require that a country treat its tradingpartners identically, but it also requires thattrade barrier reductions negotiated on abilateral basis be extended to all GAT’I’ mem-bers. By substituting bilateral, discriminatoryagreements for multilateral approaches to tradenegotiations and dispute settlement, countriesraise doubts about the long-run viability ofGATT.

This paper provides an introduction to non-tariff barriers. We begin by identifying numer-ous non-tariff barriers and document their pro-liferation. We then use supply and demandanalysis to identify the general effects of twofrequently used non-tariff barriers: quotas andvoluntary export restraints. Next, we considerwhy non-tariff barriers are used instead oftariffs. A brief history of GATT’s attempts tocounteract the expansion of non-tariff barrierscompletes the body of the paper.

NON-TARIFF BARRIERS:TYPES AND USE

A tariff is a tax imposed on foreign goods asthey enter a country; non-tariff barriers, on theother hand, are non-tax measures imposed bygovernments to favor domestic over foreignsuppliers. Non-tariff barriers encompass a widerange of measures. Some have relatively unim-portant trade effects. For example, packagingand labeling requirements can impede trade,but usually only marginally. Other non-tariffmeasures such as quotas, voluntary exportrestraints, trade restraints under the MultifiberArrangement, non-automatic import authoriza-tions and variable import levies have muchmore significant effects.~These “hard-core” non-tariff measures are designed to reduce importsand, thereby, benefit domestic producers. The

discussion below focuses on these hard-corebarriers.

Quotas

A quota is simply a maximum limitation,specified in either value or physical units, onimports of a product for a given period. It is en-forced through licenses issued to either im-porters or exporters and may be applied to im-ports from specific countries or from all foreign

countries generally. Two examples illustratethese different characteristics. The United Statesimposes a general quota on dried milk imports;licenses are granted to certain U.S. trading com-panies, who are allowed to import a maximumquantity of dried milk based on their previousimports. In a different situation U.S. sugar im-ports are limited by a quota that specifies theshares of individual countries; the right to sellsugar to the United States is given directly tothe governments of these countries.

Voluntary Export Restraints andthe Multjfiber Arrangement

Voluntary export restraints, which are nearlyidentical to quotas, are agreements between anexporting and an importing country limiting themaximum amount of exports in either value orquantity terms to be sold within a given period.

Characterizing these restraints as “voluntary” issomewhat misleading because they are fre-quently designed to prevent official protectivemeasures by the importing country. In the1980s, for example, exports by the Japaneseautomobile industry to the United States andthe United Kingdom have been limited “volun-tarily” to prevent the governments of thesecountries from directly limiting imports ofJapanese autos.

An example of a voluntary export restraint ona much broader scale is the Multifiber Arrange-ment. Originally signed in 1974 as a temporaryexception to CA’T’T and renewed three timessince, the Multifiber Arrangement allows forspecial rules to govern trade in textiles and ap-parel. Under this agm’eement, quotas are set onmost imports of textiles and apparel bydeveloped countries from developing countries,while imports of textiles and apparel from otherdeveloped countm’ies except Japan are not sub-ject to any restrictions. Multilateral voluntaryexport restraint agreements are frequentlycalled “orderly marketing agreements.”

Non-Automatic ImportAuthorizations

Non-automatic import authorizations are non-tariff barriers in which the approval to importis not granted freely or automatically. There

~Thissubset of non-tariff barriers is taken from Laird andYeats (forthcoming). This subset excludes a number ofnon-tariff barriers that can also have sizeable effects.Among these are government procurement policies, delays

at customs, health and sanitary regulations, technical stan-dards, minimum import price regulations, tariff quotas andmonitoring measures. See appendix 4 in Laud and Yeatsfor a glossary of terms associated with non-tariff barriers.

,A.wAnv,tcon, ~aa’,,

34

are two general categories of non-automaticlicensing.

Discretionary licensing, often called liberallicensing, occurs when an importer’s govern-ment must approve a specific import; however,precise conditions to ensure approval are notspecified. Frequently, this form of licensing isused to administer quantitative limits. Under thecurrent restraints on U.S. imports of steel, adomestic user can request authorization to ex-ceed the maximum import limitation if thespecific product is unavailable domestically at areasonable cost. Exactly how availability andcost considerations affect the probability of anapproval are left to the discretion of the

authorities.

The second category of non-automatic importlicensing requires the importer to meet specific

conditions, such as minimum export perfor-mance, the use of the imported good for aspecific purpose or required purchases ofdomestic products. In an export-import linkagescheme, a firm’s value of imported componentsis limited to a maximum percentage of the valueof its exports. ‘rhis measure is intended to im-prove a country’s trade balance and protectdomestic producers of components.-5 Export-import linkage requirements are numerous. Forexample, in Yugoslavia during the early 1980s,authorized importers of automobiles were re-quired to export goods totaling at least 30 per-cent of the value of each imported automobile.6

Variable lEnport Levies

Variable import levies are special charges setto equalize the import price of a pm’oduct with a

domestic target price. ‘Fhe levies are variable sothat as the world price of a product falls (rises),the levy rises (falls).’ The result is that price

changes in the world market will not affectdirectly the domestic price. ‘I’hese measures arean integral aspect of the European Community’sCommon Agricultural Policy. For example, inMarch 1987, the European Community’s price

for wheat was $8.53 per bushel, while theworld price was $1.95 per bushel. Prospectiveimporters were faced with a levy of $6.58 perbushel!’

The Use and Expansion of i\T00

Tariff BarriersIn a current study, Laird and Yeats (forthcom-

ing) measure the share of a country’s importssubject to hard-core non-tariff barriers. Because

countries frequently impose non-tariff barrierson the imports of a specific good from aspecific country, but not on imports of thesame good from another country, they disag-gregated each country’s imports by both pro-duct and country of origin to permit calculationof the total value of a country’s imports subjectto non-tariff barriers. Each country’s “coverageratio” is simply the value of imports subject to

non-tariff barriers divided by the total value ofimports.’

Table 1 shows the trade coverage ratio for 10European Community and six other industrialcountries for 1981 and 1986. In computing thisratio, the 1981 and 1986 non-tariff measures are

apphed to a constant 1981 trade base. ‘rhus, thefigures identify changes in the use, but not theintensity, of specific non-tariff measures, whileholding constant the effects of trade changes.

‘See Herander and Thomas (1986) for a theoreticaldemonstration that an export-import linkage scheme mightnot improve a country’s trade balance.

6For details on the policies of Yugoslavia as well asnumerous other countries, see “Survey of AutomotiveTrade Restrictions Maintained by Selected Nations”(1982).

‘Variable import levies, which are actually variable tariffs,are considered non-tariff barriers in this study for tworeasons. First, the international trade literature generallycharacterizes variable import levies as non-tariff barriers.See Nogues et al. (1986) for another list of non-tariff bar-riers that includes variable import levies. Second, Lairdand Yeats (forthcoming) provide the most up-to-date dataon non-tariff barriers and we have no way to removevariable import levies from their data.

‘The numerical example is from Coughlin and Carraro(1988).

‘One weakness of the coverage ratio as a measure of pro-tectionism is that more-restrictive non-tariff barriers tend to

receive a lower weight in the construction of the coverageratio than less-restrictive ones. For example, a non-tariffbarrier that eliminated all imports of a good from a countrywould have a smaller impact on the coverage ratio than aless-restrictive measure. Assume that one country’s im-ports are valued at $100, $15 of which comes from coun-try A, and there are no non-tariff barriers. In this case, thecoverage ratio is zero. Suppose that a non-tariff barrier isnow imposed on imports of goods from country A. In thefirst case, assume that imports from country A declinefrom $15 to $10; alternatively, suppose that importsdecline from $15 to zero. The non-tariff barrier in the sec-ond case is more restrictive; however, the change in thecoverage ratio does not reflect this fact. The coverageratio becomes 10.5 percent ($10/$95) in the first case andzero percent ($01585) in the second. Thus, the “intensity”of the protection provided by non-tariff barriers is notmeasured accurately by this coverage ratio. An alternativemeasure focusing on the share of trade “affected” by non-tariff barriers, which also highlights the proliferation ofnon-tariff barriers, can be found in Laird and Yeats (1989).

FEDERAL RESERVE BANK OF St LOWS

35

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A number of facts emerge i st, the cover tgeratio aries ubstantially across countries. In1981, the cove age ratio ranged from 6.7 percent in Denmark t 46.4 percent in et~Zea-land and, in 1986, from 7.9 percent in Denm~ k0 32.4 pe cent in New Zealand. Second, for

most countri s, the coy age ra io ha in rease -

his caus d the coverage tatio u ing the worldtr de igures of all is ount ies to increasefrom .1 percent in 1981 to 17.7 per ent n

1986. Third, the United States had the largestpercentage-point increase, as its coverage ratioincreased from 11.4 percent in 1981 to 17.3percent in 1986. The 5.9 percentage-point in-crease was more than double the increase forall countries.

Laird and Yeats provide evidence that exports

from developing countries to industrial coun-tries are affected to a larger extent than tradeamong industrial countries. For example, the1981 trade coverage ratio was 18.8 percent fordeveloping country exports to industrial coun-tries and 14.3 percent for intra-industria~ coun-

try trade. A similar pattern prevailed in 1986with a coverage ratio of 20.6 percent fordeveloping country exports to industrial coun-tries and 17.5 percent for intra-industrial coun-

try trade.b0

Table 2 contains coverage ratio data on a pro-duct basis. As a result of the Multifiber Ar-rangement, trade in textiles and clothing is sub-ject to non-tariff barriers. For example, slightlymore than one-third of European Communityand U.S. imports of textiles are affected, while

approximately two-thirds of European Com-munity and three-quarters of U.S. imports ofclothing are affected. Since these goods are

among the most impot’tant manufactured ex-ports from developing countries, coverage ratiosfor imports from developing countries relativeto industrial countries tend to be higher.

Table 2 also identifies some other manufac-tured goods affected substantially by non-tariff

harriers, especially iron and steel and transportequipment. More than three-quarters of U.S. im-ports of iron arid steel and more than 40 per-cent of transport equipment are affected. Thecorresponding figures for the European Com-munity are 46.2 percent and 23.6 percent.

While trade in manufactured goods is affectedsubstantially by non-tariff barriers, trade inagricultural goods is affected to an even greaterextent. The coverage ratios for agricultural

goods shown in table 3 are substantially abovethose for manufactured goods shown in table 2.The agricultural coverage ratios frequently ex-

ceed 70 percent; see, for example, the U.S.ratios for sugar and honey (91.9 percent), dairyproducts (87.8 percent) and oil seeds and nuts(74 percent). Even higher agricultural coverage

‘°Whiiethis differential may reflect discrimination directed atdeveloping countries, another interpretation is that the dif-ferential is product-based. Chow and Kellman (1988), for

example, show that the relatively higher tariff rates facedby developing countries can be explained by productcharacteristics.

JANIIARVIFFRR1IARV 14P,ci

Table 2Coverage Ratios of Selected Non-tariff Measures on Selected ManufacturedGoods: 1986

UnitedSITC Description 69 ~10~ Switzerland Finland Japan -- Norway New Zealand - - States

61 Leather products 7 7% 30 8 S/r, 0 0% 47 0 % 0.0% 59 9% 0.0%62 Rubbor products 9.1 0.0 00 13.6 0.7 539 0063 Wood and cork I 0 19 00 00 00 53.0 0.064 Faperandart~Ies 59 00 00 00 00 486 0065 Textiles 347 00 1 6 555 6.1 27.4 34566 Cement. clay and glass 2.9 0.0 0.0 24.1 0.0 54.5 0 167 Iron and steel 462 10 00 0.0 00 64.1 76368 Non-ferrous metals 0.8 1.9 3 5 0 4 0.0 8.7 0.069 Metal manufactures. n e 5. 2 1 5.6 0 0 1.0 0.0 35.3 11.071 Non-electric machinery 3.1 4.7 0.0 4.4 0.0 359 0.072 Electric machinery il_I 0.0 00 03 00 64.0 1.473 Transport equipment 236 847 00 173 0.0 22.1 41.181 Plumbing & lighting f:xtures 00 0.0 00 00 0.0 682 0.082 Furniture 0.3 0.0 00 00 0.1 0.0 1.183 Travel goods 0.9 530 0.0 0.0 0.0 100.0 18.984 Clothing 65.7 18.6 12.1 Il 3 865 52.2 76485 Footwear 11.3 74.6 00 6.9 0.3 82.9 0.186 Instruments 3.8 00 0.0 14.1 0.0 53 0.0

NOTE See table 1 for the list of hard-core non-lariff measures The coverage ratio is. for each given product and country,the imports subject to a hard-core non-tariff measure divided by total imports

European Community intro-trade is excluded.

SOURCE. Laird and Yeats (forthcoming)

Table 3Coverage Ratios of Non4ariff Measures on Selected Agricultural Goods: 1986

United

SITC -- Description -. - EC ~1O~ Switzerland Finland Japan - Norway New Zealand States

00 Lmve animals 602% 100.0% 95.3% 1.2% 98.0% 00% 0.00/001 Meat 77 8 97.8 89.3 65.7 99 7 14.4 0 002 Dairy products 99.7 45.5 1000 732 82 1 12.7 87.803 Fish and seafood 46 583 97 100.0 80.4 36 0.004 Cereals and preparations 969 87.8 834 32.5 100.0 5 1 0.005 Fruits and vegetables 36.0 44.8 51.6 18.3 1000 392 0.906 Sugar and honey 85.8 0.0 89 1 84.6 1000 0.9 91.907 Colfee and cocoa 175 0.0 00 00 100.0 0.9 2.308 Animal feeds ii g 309 53 13.7 92.7 16.9 0.309 Food preparatons 10.2 13.4 0.0 173 1000 737 0411 Beverages 249 764 88.0 70.7 100.0 5.6 0012 Inbacco 0.0 0.0 0.0 843 00 5.1 0021 H’des and skins 0.0 991 00 181 00 0.0 3222 Oil seeds and nuts 24.8 560 1000 43 1000 00 74.023 Rubber 00 0.0 00 0.0 00 00 0.024 Wood and cork 06 396 0.0 0.0 00 24 0025 Pulp and paper 00 0.0 00 0.0 00 00 0026 Silk, wool, cotton. inc go 248 00 1 2 4.6 164 2.129 ~~ude animal & vegetable matter 19 0 78 0 5.3 51.8 69 1 11 2 11.0

NOTE See table 1 br the t:si of hard-core ncr-la-itt measures. The coverage rato is. for each given product and coun-try the imports sub~ecito a hard-core non tariff measure divided by tnmat importsEuiopear community nt,a-tiade ‘s excluoeo

SOURCE Laird and Yeats tfodhcoming~

37

Table 4The Use of Selected Non-tariff Measures

Change in the Share of ImportsShare of Imports Facing NTMs. 19811 Facing NTMs, 1981~862

Importer QUOT VER MFA NAIA VIL QUOT VER MFA NAIA VIL

Belgium Luxembourg 03% 5.1% 1 2% 5.7% 5.2% 11% 22% 0.0% 00% 0.0%Denmark 03 2.6 23 1.1 1.4 01 12 —01 0.0 00Gennany. Fed. Rep. 05 3.0 4.9 3.0 20 0.4 20 —06 00 00France 58 12 18 7.1 2.2 16 1.8 0.0 0.0 0.0Greece 82 &8 12 3.9 38 0.4 4.4 00 00 00Great Britain 22 2.0 29 5.1 4.4 —0.9 2.3 0.0 0.0 0.0Ireland 0.1 4.6 1.3 2.2 22 0.1 1.5 0.0 0.0 0.0Daly 7.5 0.8 18 70 66 0.6 1.2 -0.1 0.0 0.0Netherlands 04 2.0 30 14.0 63 2.5 36 —02 0.0 0.0

EC (10~ 26 23 30 5.6 3.7 0.5 2.1 -02 0.0 0.0

Switzerland 25 0.0 0.4 28 05 00 00 0.0 00 0.0Finland 09 0.0 02 6.7 18 00 0.0 0.1 0.0 0.0Japan 142 0.0 0.0 7.7 1.8 01 0.0 0.0 0.0 0.0Norway 52 0.0 0.0 2.2 0.0 -05 00 0.0 1.1 0.0New Zealand 253 ao 0.0 256 00 16 00 0.0 —8.8 0.0United Stales 05 69 32 ao 0.0 15 44 00 0.0 1.4

All above 4.0 3.1 2.3 42 2.0 07 22 —0.1 —01 0.4

Petroleum prooucts have been excluded trom the calculations The abbrevialions for the non-tariff measures are as follows:QUOT—quotas, VER —voluntary export restraints; MEA—restrictions under the Multifiber Arrangement: NAIA-—non-automaticimport authorizations; and VIL—-variable import levies.

2The change is tne 1986 share less the 1981 share.3European Community intra-trade is excluded.

SOURCE: Laird and Yeats (forthcoming)

ratios are found for the European Communityand Japan.

Another dimension of the use of non-tariffbarriers concerns differences in the use ofspecific barriers across countries. Table 4 showsthe share of imports (by country) that faced dif-ferent non-tariff measures in 1981 and how thisshare changed by 1986. A number of factsemerge. In 1981, non-automatic import authori-zations and quotas affected the largest share ofimports when all 16 countries are considered;by 1986, this was no longer the case. Voluntaryexport restraints, whose use in the UnitedStates, Greece, the Netherlands and Great Bri-tain rose substantially, affected the largest shareof imports (5.3 percent) by 1986. Meanwhile,the share of imports affected by quotas rosefrom 4 percent in 1981 to 4.7 percent by 1986.

Comparisons of the specific measures acrosscountries indicate that voluntary export re-straints were used more extensively by theUnited States than by other countries. By 1986,

11.3 percent of U.S. imports were affected byvoluntary export restraints; Greece, with 9.2percent, had the next-highest share of its im-ports affected by these restraints.

SUPPLY AND DEMAND ANALYSISUSING QUOTAS AND VOLUNTARYEXPORT RESTRAINTS

Although the quantitative effects of non-tariffbarriers are not always easily identified andmeasured, a theoretical identification of theirmajor effects can be derived using supply anddemand analysis. We begin by examining the ef-fects of a quota, then discuss how a voluntaryexpori restraint can be analyzed similarly.

In figure 1, lID represents the U.S. importdemand curve for some good produced by U.S.and foreign producers. The foreign supplycurve (that is, the supply curve for imports intothe United States) for the good is SS. With freetrade, the United States will import QF units ofthe good and pay a price per unit of ~F-

JANUARY/FEBRUARY 1989

38

Figure 1The Price and Quantity Effects of a Quotaand a Voluntary Export RestraintPrice

PQ

Now, suppose that an import quota of Qq isimposed by the United States. This restrictioncauses the import supply curve to become ver-tical at the restricted quantity. Thus, the importsupply curve is the kinked curve SCS’. Therestriction reduces the quantity of imports from°,F to Qq~the domestic price to rise from P8 toPQ and the foreign price to decline from P8 toPJ3.” The higher domestic price reduces totalU.S. consumption of the good, but increasesU.S. production; thus, U.S. producers of thegood benefit at the expense of U.S. consumersin general. The difference between whatdomestic and foreign consumers pay, 8B~Q~is apremium per unit of imports that can be ap-propriated by exporters, importers or govern-ment. The method used to allocate importlicenses determines the distribution of thesepremiums among the potential claimants.

A voluntary export restraint has the samegeneral effects as an equivalent quota. A volun-

‘1Figure I can also be used to illustrate a variable importlevy. While a quota limits the quantity ot imports, avariable import levy is used to fix the price. Assuming atarget (domestic) price of PQ, when world prices fall belowthis price, the levy will be altered automatically to maintainthe price of P0. Thus, no matter how far world pricesdecline, the quantity of imports will not rise above O~.Consequently, a variable import le’~yand a quota have thesame effect, even though they are implemented differently.

‘2Theoretical research on the impact ot non-tariff barriershas explored various issues that we do not mention in the

tary export restraint reduces the quantity of im-ports, which, in turn, causes the domestic price

to rise and the foreign price to fall as shown infigure 1. Again, the higher domestic pricebenefits U.S. producers of this good at the ex-pense of U.S. consumers. Finally, the differencebetween what domestic and foreign consumerspay, 8B~q~is a premium per unit of importsthat can he captured by exporters, importers orgovernment.

While the supply and demand analysis isolatesthe major effects of two frequently used non-tariff barriers, it conveys virtually no informa-tion about either the magnitude of the costs andbenefits of non-tariff barriers or their dynamicconsequences.’2 Various case studies, however,have provided estimates of these costs andbenefits. A review of this literature can hefound in Laird and Yeats. Two case studies areprovided in the shaded inserts on pages and

Quantity of as examples of such analyses. The first exam-Imports pIe examines the impact of the U.S. quota on

sugar imports; the second examines the effectof the U.S-Japanese agreement to limit Japaneseautomobile exports to the United States.

As a protectionist policy, non-tariff barriers

are a method for redistributing wealth fromconsumers in general to selected firms andworkers. This redistribution is abetted by con-sumer ignorance and the costs of mobilizing aneffective force to counteract protectionistdemands. As Coughlin et al. (1988) have demon-strated recently, the benefits received by se-lected groups of firms and workers are far out-weighed by the costs borne by the rest of thepopulation.

WHY USE NON-TARIFF BARRIERSINSTEAD OF TARIFFS?

Since non-tariff barriers have been used in-creasingly in recent years, an obvious questionis why non-tariff harriers rather than tariff bar-

text, two of which are mentioned below. Since manymarkets for internationally traded goods are imperfectlycompetitive, a standard topic in introductory internationaltrade texts is to identify the effect of an import quota inthe presence of monopoly. See Krugman and Obstfeld(1988) tor an elementary discussion. Since voluntaryexport restraints discriminate among trading partners, theeffects of this differential treatment have been explored.See Jones (1984) for such an analysis.

PB

QQ OF

FEDERAL RESERVE BANK OF ST. LOUtS

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tlu’ .tst—LlIlipIi)It ahotil the clistiiluiitic;ii ol tIn- pflHhticI’I—~ gained SI .25 hi]linn in 1984 and

ptni’ j)ii(C cI l(’tl-4 II liii’ i~l)0it ifStiiIilIl% li-ti lin—i’ign jtixtnt-t’rs gainiii 5.5 billion. (II [lieto i~1

1Ln\eiltnt IILJJi’ piit(’ t’ltttt,’ tin tli)iiii slit- Its i’J4i~[)Jt)(ItiiIi . ~$tin Japanese pr-iiclticti-s

aiicl hiipor[ed cais Limit F S. pi othicer~gain— ncr_nod 53.23 billion. Ii acrwaLe. Illis ligtii-ioct ~ billion in I 98-I and ltiii’ign 1)1 t.itltitt’i ~ iks an t)Iik (ILlS itiP’Ofl t\ It thi’ lalianesigainotl Si.: billion. (It liii’ lorcign ~i—otlnci~ go~et-nnient cIliltinLiOd lit- resu-aints h’t-tiiiclg~tin..lapanew prnchirt’rs i o ei~edS I billion. earl_v U1f45 t\ 11(0 the Reagan ailininist -alionthi [lit titliei sincl it ilit’ e\1nJit I istiajilts deridi’cl nOt Ii) ri’qtit’st an i’’.teimiun ol thi-led to eqon ~iloni qtuiht~ etfrris, then I .5. agri’entont.

2ifl early 1985. the Reagar- administration decided that level and ,n 1987 extended Inc restraints for anotherthe domestic auto’nobj!e .ndustry had adjusted to year without a turther increase in the cci’inq. Theforeign competition aid announced they wouid nct ask uni~ateratoec-sion to extend the reslra-nts is a c~earn-for an extension Nevertheless in early 1985. the dication mat the Japanese. especi&iy automobile poJapanese governnient exleneed the restraints through ducers. were henefituig from the restrantsearly 1987 at a level 24 percent above the previous

riers have become so popular.’3 A review byDeardorff (1987) concludes that there currentlyis no definitive answer to this question; how-ever, numerous reasons have been suggested.

The Impact of GATT: An Institu-tional Constraint on the Use ofTarjffs

GATT is an institution whose original missionwas to restrict the use of tariffs. Given this con-straint, policymakers willing to respond to pro-tectionist demands were forced to use non-tariffdevices. Thus, in this case, non-tariff barriersare simply a substitute for tariffs. In fact, re-search by Ray (1981) indicates that non-tariffbarriers have been used to reverse the effectsof multilateral tariff reductions negotiatedunder GATT.14

Certainty of Domestic Benefits

Deardorff (1987) suggests that non-tariff bar-riers are preferred to tariffs because policy-makers and demanders of protection believethat the effects of tariffs are less certain. Thisperception could be due to various reasons,some real and some illusory. For example, itmay be much easier to see that a quota of Imillion limits automobile imports to 1 millionthan to demonstrate conclusively that a tariffof, say, $300 per car would result in imports ofonly I million automobiles.

In part, doubts that tariffs will have thedesired effect is based on the possibility of ac-tions that could be taken to offset the effects ofhigher tariffs. For example, the imposition of atariff may induce the exporting country to sub-sidize the exporting firms in an attempt toreduce the tariff’s effectiveness. The effects ofquotas, on the other hand, are not altered bysuch subsidies.’~

“Dating from Bhagwati’s seminal discussion in 1965, com-parisons of the theoretical effects of tariffs and non-tariffbarriers have been a frequent topic in the internationaltrade literature. Under various circumstances, a tariff anda specific non-tariff barrier, say, a quota, can cause dif-ferent final prices and production despite reducing tradeby equal amounts. These circumstances produce what istermed nonequivalence. Tariffs and quotas are equivalentwhen markets are pertectly competitive. In this case, thereis no reason to prefer one to the other.

Bhagwati (1965, 1968) has demonstrated that theequivalence of tariffs and quotas breaks down in imper-fectly competitive markets. Numerous situations can becharacterized as imperfectly competitive. To date, how-ever, the literature has provided no compelling reasons forpreferring non-tariff over tariff barriers. For a recent exam-ple from this literature, see Krishna (1985).

‘4A question remains, however, as to why the framers ofGATT chose to focus primarily on tariffs rather than non-tarift barriers.

‘5Deardorff’s (1987) review provides another perspective onthe role of uncertainty. The optimatity of trade policy toolshas been explored extensively using trade models withuncertainty. These models, which rely on risk aversion(that is, an individual requires a higher expected return ascompensation for an increase in risk) and uncertaintyoriginating outside a country, conclude that quotas arepreferred to tariffs. The country is insulated from theuncertainty stemming from randomness in world prices orimport supply curves by a quota that stabilizes the priceand quantity of imports. One problem with this explana-tion, however, is that the quota is instituted before theuncertain state of the world is known, while in the realworld protection is generally provided after a change in theworld market.

FEDERAL RESERVE BANK OF St LOUIS

41

-it, Si it, nv,r~nrnit,r,v ic,ao

\lashtis Ii 987) ha, itlt-~ntific’cl 1 nLIIlIhtT at Flie JJit’lt’dStili4l\ t-t’stiictive inpoit harriersthe tlvtiatiitt’ rohisctt]tlenie-, iiF thu I 5 sugar have J}lOdLict’d trnsioii’. t~ith nunu-rotia OX-

pt-ogi-aiii - pant sieninling li’cnii tlit’ lai’t thai porters at si gar. host of whom alt’ dtt elop—sugat- has stwerai rinse suhstituttm (:nt-n rig eountrit!s 10 t-onlorrn t~lilt the (1t’iieralsu c’rttttier~ nijti—t’fflorit ‘,tt t-uteners honu~ .-~grot’ment on I acilts antI fl-atlt’, tiiit importanti spt’cialtv 5tI~4iti’5at’i’ all t’lo~t’stihstitcit~i~. tliJOI is titusi hi- •tpplit’d lii ii 111)11-

liglier sugar pt-it-es hate induced the produt-— disrrimijiaicir~ iashioti Ihi’ t niLed itatt’stiori ol ,tlternatn t su eotetiet-s that t ontpt-Ie plied this pt-tn ision in basing its titlohi zilloca—with anti, c’onstqtieritlt - threatt’ii I 5 sugar tion art iiupot-ts during Ihe i’tiliiiit cit li-ce—

pi’oditt-t’r~ lllai’hei pc-reid ol 1 973—81 ~ttempls to main-- t~tillt’tnlstanl shares NW most t’titititiies,I he lact that sUgar is ttst!cI in titl brunt -

lnnt et or. i_itt info nraritt-al piohients ( (lUll—good liii’, ,et iii illoliciri a ntinihec ol ad- - - , - -- - - - tilt’-, c’\pertehlc-iytg rapid grou UI n sugar tx-Rlstnlettts. LXaiilpli’~abound of tiit’ iirstcu’ttctn’, .‘. -

- - - - ports [ci the I jutc’tl ~,tatc’’, huRt eon 1 Ih~antIinduced In tht’ at-til cia11., lirgli t S sugar- -

- - - - - - - 1981 urn-c subjected to Stihst,itltial nits bet-price. 101- e~atnple.the Lu-go prit.~’dillerc-n— - -- , - - \t tu’ri the end cit tlit’ I ree-market period aridtial lmttvc’t’n L .s and I cii-tttgti sugar prot- ties - -

- - - - - liii’ hcLfrtltililg ot liii tiUlotas. I-tn’ t’xaiiiplu,U lust ath iiilta’e to loi-t’igu. espec talk ( ana-

C’ - - - - sugar flXpIJI’Is I iiiiii lli)il(iUltit% were -c’tlttt-ecldian. itiod-pitit’t~ssnigtunic. t tie ‘-algal’ pohiy him 93,500 (Ins in 1981 In 2,S 0011 tons inr~iiiIll! ‘ n-u.ed as a tax on [.5 rc’tiilc’i’s anti

- - I98o.~ tIi~ttt%as not it., itti oti ttii’t’tgnii till’,

I lie otlet’t cit Ibis cut was tiiitigatt’d sortie-l’r-ath I lc,~ts i-t-s1nnidetl Lu [lit-se ~ u hat in 19.53 ~t hen tlit’ I nitt-cl Stales flails-

rh~lilgt’S fl” a ntpiti e.\pansiwl ill unpork at I erred ‘2 jicc t!iit at \ic-at’atzttas titiota tosllgiti t ontaining gimcIs t’;istiecl. In l,tu,t tic Haritiurasanac butt that sinittltittteriu~lttIillt’t-ential hr’tn-oi’n .S and u or’lti sttgai’ prirtislied he Sandinista t-.’czinie and eu arch-ilpt-it-us hr-i-ann- so ar-ge at out’ time that a !lt’ighhlfl-irhg s[att- thotight to hi’ in ciangt-tsugai’—t-otiuonmg gootis it Ott’ imported sc.tlt’lv ti-nm tht- Nit-~ti’aau;~n—’uppoi-tetiitnii~Ilioii.liii their’ 5ti~itI’content. lot trt:tntplt-, tlutuig this action ‘, olatt’d UVI I ittlOs and gent’—1983, uor]cj sttnar ~ detlincd so shai pft i ated nun-h criticism of the nitc’ti Stales.that in June I 185. till’ L .~. sugar iii itt’ \VC1” Such a qttrtta c~ ctim inl-rc’a’i’-, tilt- likohhood77(i fit-rI-c ill oF the u odd pine. 1 his tiil— that I ‘ade potict i., used its’ ihiJtlet-Otlothiir

tere.iicn triulUlced sor~etic-ins n the I ntled ieasotin -

Stiiit”’ to mpoi-t (.an~icIiaiiputt-aLt’ ink

whit ii ii as nut sUIl)m’r-t to liii’ qtiotir, ~- hit’ lesson’, Ii out [he L S. sugar pt’ogt liltiC55 it ti OntiLict the sugar’. - -

art’ straiglitlot u ar-cl. I it-st stgnttti’~ititt-tisI.,-l lit’ iittluced chanw’s in pi’~tittcltoti and li,i~t’ h’’eti iiiiiost’tl on ( -.5 t’onstmit-rs Sc—

I fl.tth’ hit i’ Ioi’ct’tI ~t illIJhttIt!d of acithtic~nal ronti. tltt’ resulting (listt;itioths iii t’i,utioiiiit’ itt—

I .5. tifluits to niautttin titt sugar prices. t Or’ t’t:n!ltt’s bitt- h,trnir’d I .5. pi od ut-t’rs tlerx-tt—risc-al ti-al I 9-MS tltt’ I ~ sugar’ import (iota (Wilt on sugar I hut!, c’cortoiliic’ rt’spoitses to

u as t-ctiitc-tti 17 pi’i-t tnt ibis Vt as toiluti Ott the legislation thu e tot eah-d a ntuniher ofr edtuu-uions ol 21fl liii -utit iii t )SU anti loopholes llitt hat i’ tiut’c!ssitrtc’d atIchtitinal

-15 T pout-out itt 987 I tacit- rectrirtiori’, nit i t’~[rictiun’-, anti tltstum’t:ons so that I.2i. SlJt4itI’

5Lt~iut stiIisliILIi(’s also hit r’ resUllt’d. In a nI otiurt-r-s could continue Itt here-lit. I otui Lbrltt-st’ ate II nih (‘11101 Urrlrt bait au itiilit)i’Is ot _‘~ ;tttutnpts It) insure tan nt’ss liat-t’ rilcl’ssi—

curia it svitJps atici hbeti~~t’ti‘—tug’tt’s ill hulk in tateil -uhstaotial rt’soitrrc’~ ho ,t”rtrtWl pro—_Iuttt- 1983; and 2l ttnittu-goruc-t quotas ciii a duction anti tt-ack’ hehnit 101 naIl., - tIn- ito—hr’oatl lange ol ingat —rnntaiuing articles ri giant has been tisiti Its’ pcihilic-ctI purpost!’ toboth bulls and retail Ioi’ms in _lanimau’,t 1983 I ru at d anti punish foreign I tiUlmiti it_s.

43

Benefits to Other Parties

The supply and demand analysis of quotasand voluntary export restraints highlights thedifference per unit of import between whatdomestic and foreign consumers pay. This pricedifferential reflects the extent of the gains thatare available for some group to appropriate.With tariffs) the price differential is captured bythe domestic government in the form of tariffrevenue. With non-tariff barriers, the domesticgovernment is not a direct beneficiary unless itsells the rights to import to the highest bidders.Otherwise, domestic importers) foreign ex-porters and foreign governments capture thesegains. The potential distribution of these benefits can influence the domestic government’schoice between tariff and non-tariff barriers.

With voluntary export restraints, the price dif-ferential identified above is typically capturedby the exporting firms from the foreign coun-try. This result may reduce the likelihood thatthe foreign country will retaliate against suchrestrictions. Given certain demand conditions inboth the U.S. and foreign markets, voluntary ex-port restraints can entail a substantial redistrib-

ution from consumers in the importing countryto selected producers in the exporting country.For example, Collyns and Dunaway (1987)estimate that the U.S-Japanese voluntary exportrestraint on automobiles yielded increasedbenefits to selected Japanese auto producersranging from $1 billion to $5.25 billion in 1984.

Hillman and Ursprung (1988) extend thepreceding idea using a simple model of tradepolicy formulation in which a democraticgovernment is choosing between a tariff and a

voluntary export restraint.bO A simplification inthis model, whose importance is discussedbelow, is that rival political candidates place novalue on tariff revenue. Assume a voluntary ex-port restraint and a tariff generate identicaldomestic producer benefits. Politicians will sup-port the voluntary export restraint over thetariff because the voluntary export restraintgenerates benefits for foreign producers that, inturn, can be appropriated partially by the politi-cians in the form of campaign contributions. Onthe other hand, the tariff revenue is assumed tohave no value for politicians. Candidates forelective office are viewed as announcing tradepolicy positions to maximize campaign contribu-tions from domestic and foreign producerinterests.

In addition to increasing the probability thatprotectionism will take the form of voluntaryexport restraints rather than tariffs, the argu-ment reveals a way that political candidates canpersonally capture revenues that, with tariffs,would have accrued to the domestic govern-ment. Nonetheless, the assumption about theperceived value of tariff revenue to politiciansand the fact that consumer interests are ig-nored in the analysis suggests one should becautious in generalizing this result.

The possible benefits to domestic politicians ofusing non-tariff rather than tariff barriers arenot restricted to campaign contributions. For ex-ample, a tariff is an explicit tax on consumerswhile a quota is an implicit tax on them. Policy-makers might find it easier to support quotasand other non-tariff barriers because they willnot be directly associated with a tax increasethat consumers, as voters, might resist.”

l6Husted (1986) also connects foreign lobbying to thedomestic economy. He finds that the dollar value offoreign lobbying in the United States is small relative toother traded service flows and that the returns to foreignlobbying generate large returns. For example, Hustedcalculated that the expenditure in the United States of$1.4 million on foreign lobbying by the world automobileindustry came primarily from Japan. Given the estimatesby Collyns and Dunaway (1987) and others indicatingJapanese automobile rents exceeded $1 billion in 1984,U.S. politicians do not appear to be capturing much ofthese rents.

“A neglected issue in the preceding comparison of non-tariff barriers with tariffs is the distribution of these restric-tions across industries. While Ray (1981) found that non-tariff barriers and tariffs are biased toward industries inwhich the United States has a comparative disadvantage,

he also found some maior differences. Tariffs are biasedtoward low-skill rather than capital-intensive industries andare unrelated to product heterogeneity and thegeographical dispersion of domestic production facilities.On the other hand, non-tariff barriers are biased towardcapital-intensive industries producing fairly homogeneousproducts. Production in these industries tends to bedistributed across regions consistent with the distributionof population.

44

GATT AND NON~TARIFFBARRIERS

The history of multilateral trade negotiationsdealing with non-tariff barriers is brief.’3

Multilateral trade negotiations are conductedunder the auspices of the General Agreementon Tariffs and Trade, which was created short-ly after World War II. GATT, a term that en-compasses the multilateral agreement governinginternational trade, the bodies administering theagreement, and all associated trade-related ac-tivities, has focused on the reduction of tariffrather than non-tariff barriers, To date, sevenrounds of GATT negotiations have been com-pleted, with the first six concerned almost ex-clusively with tariffs.19

The Tokyo Round

The ‘Tokyo Round, the most recently com-pleted round lasting from 1973 to 1979, was acomprehensive effort to reduce trade obstaclesstemming from tariffs and non-tariff measures.New or reinforced agreements called “codes,”were reached on the following non-tariff mea-sures: 1) subsidies and countervailing duties; 2)government procurement; 3) technical stan-dards; 4) import licensing procedures; 5) cus-toms valuation; and 6) anti.dumping,20

The code on subsidies and countervailingduties prohibits direct export subsidies, exceptunder certain situations in agriculture. Thiscode is noteworthy in extending GATT’s prohibi-tion of export subsidies to trade in raw matet-ials. Because nearly all governments subsidizedomestic producers to some extent, the code es-tablished criteria to distinguish between a do-mestic and an export subsidy. Domestic subsi-dies that treat domestic and export activitiesidentically are generally allowed. Countervailingduties, which are tariffs to offset a subsidyreceived by a foreign exporter, are prohibited

unless the subsidized goods are shown to becausing (or threatening) “material” injury to adomestic producer. This code also allows acountry to seek redress for cases in whichanother country’s subsidized exports displace itsexports in third-country markets.

The code on government procurement statesthat, for qualifying nonmilitary purchases,governments (including government-controlledentities) must treat foreign and domestic pro-ducers alike. In addition to resolving disputes,the code establishes procedures for opening andawarding bids.

The code on technical standards attempts toensure that technical regulations and productstandards such as labeling, safety, pollution andquality requirements do not create unnecessaryobstacles to trade. ‘the code does not specifystandards; however, it establishes rules for set-ting standards and resolving disputes.

The code on import licensing procedures,similar to the code on technical standards, isnot spelled out in detail. Generally speaking,governments stated their commitment to sim-plify the procedures that importers must followto obtain licenses. Reducing delays in licensingand paperwork are two areas of specialinterest.

The code on customs valuation established auniform system of rules to determine the cus-toms value for imported goods. This code usestransaction prices to determine value and isdesigned to preclude the use of arbitrary valuesthat increase the protective effect of a tariffrate.

Finally, the anti-dumping code prescribes rulesfor anti-dumping investigations, the impositionof anti-dumping duties and settling disputes.The standards for determining injury are clari-fied. This code obligates developed countries totreat developing countries preferentially.

‘8For a brief history of multilateral trade negotiations, as wellas details on the current negotiations, see The GATTNegotiations and U.S. Trade Policy, a 1987 study by theCongressional Budget Office For additional details on thecurrent multilateral negotiations, see Aniaria (1986) andthe 1987 report by the United States International TradeCommission, Operation of fhe Trade Agreements Program.

19The sixth round, known as the Kennedy Round, markedthe first time for a GATT agreement on non-tariff barriers.Agreements were reached on an anti-dumping code andthe elimination the U.S. system of American Selling

Prices, which applied a tariff rate for certain imports to anartificially high dutiable value. The dutiable value was setequal to the price of a competing good produceddomestically instead of to the import’s actual invoice price.This system was applied to a small portion of total imports,primarily benzenoid chemicals and rubber footwear. Bothagreements were blocked by Congress, but were acceptedin the next round of negotiations.

‘°Non-tariffbarriers were also reduced in civil aircraft andselected agricultural goods, primarily meat and cheese.

ccfln~al cc 5I&KO( fl~rcy fltII~

45

The Uruguay Round

The Tokyo Round codes have relied on good-faith compliance, which has tended to under-mine their effectiveness. Streamlining andresolving disputes is a priority during the cur-rent round of multilateral negotiations, theUruguay Round. The Tokyo Round codes willbe reviewed and possibly modified during theUruguay Round. In particular, broadening thegovernment procurement code to include ser-vice contracts will be discussed. Concerning thetechnical standards code, agreements dealingwith the mutual acceptance of test data gener-ated by other parties and the openness of theactivities of standards bodies will be sought. Amajor issue in the anti-dumping code is how tohandle input dumping (that is, export sales ofproducts that contain inputs purchased atdumped prices).

The Uruguay Round, begun in September1986, has and will discuss a number of non-tariff barrier issues, many of which extendbeyond the codes of the Tokyo Round. Tradeissues involving agriculture and services (bank-ing, construction, insurance and transportation)are of paramount importance. The United Stateshas proposed the elimination of all trade- andproduction-distorting agricultural policies. Whilethe major agricultural nations have agreed tothe principle of liberalizing agriculture, thesweeping nature of the U.S. proposal has beenresisted by some nations, especially the Euro-pean Community. With respect to services, theprimary goal is to establish principles for exten-ding GATT coverage to this trade.

A recent study by the Congressional BudgetOffice (1987) predicts that the performance ofthe Uruguay Round will be judged largely on itshandling of non-tariff barrier issues. GATT hasnot effectively combatted rising non-tariff bar-riers for many reasons. Two reasons are thatthe effects of non-tariff barriers are less trans-parent than the effects of tariffs and, in manycases, non-tariff barriers are designed to satisfya domestic rather than an international objec-tive. A major obstacle is determining at whatpoint a national economic policy, whose interna-tional effects are somewhat uncertain, becomesan internationally unacceptable non-tariff bar-rier. ‘I’hese national economic policies have fre-quently resulted from the lobbying efforts ofstrong domestic constituencies such asagricultural interests. ‘Thus, major trade policy

reform will be met with much resistance fromthese groups.

CONCLUSION

Non-tariff barriers have effects similar tothose of tariffs: they increase domestic pricesand impede trade to protect selected producersat the expense of domestic consumers. Asshown in the case studies of sugar and automo-biles, they also have other effects, generallyadverse.

Despite the adverse national consequences,the use of non-tariff barriers has increasedsharply in recent years. The chances for a re-versal of this trend appear to be small. Thevariety of non-tariff measures, the difficulties ofidentifying and measuring their effects and thebenefits received by specific groups combine tomake a significant reduction of non-tariff bar-riers in the ongoing Uruguay Round negotia-tions unlikely.

The original mission of GAn, which has beenlargely achieved, was to reduce tariffs. Thequestion, however, of why policymakers havepreferred to use non-tariff barriers rather thantariffs in recent years remains. The more cer-tain protective effects of non-tariff bat-riers isone plausible explanation. A second explanation,which focuses on the distribution of the bene-fits, is that the benefits of non-tariff barrierscan be captured by foreign producers anddomestic politicians. Such an allocation of bene-fits increases the probability that the politicalprocess generates larger amounts of non-tariffbarriers relative to tariffs. A final explanation isthat their adverse effects are generally less ob-vious to consumers than the effects of tariffs.

REFERENCES

Anjaria, S.J. ‘A New Round of Global Trade Negotiations,’Finance and Development (June 1986), pp. 2-6.

Bhagwati, Jagdish N. “On the Equivalence of Tariffs andQuotas,” in RE. Caves et al., eds. Trade, Growth, and theBalance of Payments: Essays in Honor of Gotifried Haberler(Rand McNally, 1965), pp. 53-67.

_______ - ‘More on the Equivalence of Tariffs andQuotas,” American Economic Review (March 1968),pp. 142-46.

Chow, Peter C. Y., and Mitchell Keiiman. Anti-LDC Bias inthe U.S. Tariff Structure: A Test of Source Versus ProductCharacteristics,” Review of Economics and Statistics(November 1988), pp. 648-53.

iSM~,aev,ccno, IAOV 1C~,t1

46

Collyns, Charles, and Steven Dunaway. “The Cost of TradeRestraints: The Case of Japanese Automobile Exports tothe United States,” International Monetary Fund StaffPapers (March 1987), pp. 150-75.

Coughlin, Cletus C., and Kenneth C. Carraro. “The DubiousSuccess of Export Subsidies for Wheat,” this Review(November/December 1988), pp. 38-47.

Coughlin, Cletus C., K. Alec Chrystal, and Geoffrey E. Wood.“Protectionist Trade Policies: A Survey of Theory,Evidence and Rationale,” this Review (January/February1988), pp. 12-29.

Deardorff, Alan V. “Why do Governments Prefer NontariffBarriers?” in Karl Brunner and Allan H. Meltzer, eds.Bubbles and Other Essays, Carnegie-Rochester Con-ference Series on Public Policy (North-Holland, 1987),pp. 191-216.

Feenstra, Robert C. “Automobile Prices and Protection: TheU.S-Japan Trade Restraint,” Journal of Policy Modeling(Spring 1985), pp. 49-68.

Herander, Mark G., and Christopher R. Thomas. “ExportPerformance and Export-Import Linkage Requirements,”Quarterly Journal of Economics (August 1986), 591-607.

Hillman, Arye L., and Heinrich W. Ursprung. “DomesticPolitics, Foreign Interests, and International Trade Policy,”American Economic Review (September 1988), pp. 729-45.

Husted, Steven. “Foreign Lobbying and the Formation ofDomestic Trade Policy,” paper presented at WesternEconomic Association Meeting, San Francisco, July 1986.

Jones, Kent. “The Political Economy of Voluntary ExportRestraint Agreements,” Kyklos (1984), pp. 82-101.

Krishna, K. “Trade Restrictions as Facilitating Practices,”National Bureau of Economic Research, Working Paper#1 546 (1985).

Krugman, Paul R., and Maurice Obstfeld. Internafiona/Economics (Scott, Foresman, 1988).

Laird, Sam, and Alexander Yeats. “Nontariff Barriers ofDeveloped Countries, 1966-86,” Finance & Development(March 1989), pp. 12-13.

Laird, Sam, and Alexander Yeats. Quantitative Methods forTrade Barrier Analysis (Macmillan, forthcoming).

Maskus, Keith E. “The International Political Economy ofU.S. Sugar Policy in the 1980’s,” United States Depart-ment of State, Bureau of Economic and Business Affairs,Planning and Economic Analysis Staff, Working Paper #1(September 1987).

Nogu~s,Julio J., Andrzej Olechowski, and L. Alan Winters.“The Extent of Nontariff Barriers to Industrial Countries’Imports,” The World Bank Economic Review (1986),pp. 181-99.

Page, Sheila. “The Rise in Protection Since 1974,” OxfordReview of Economic Policy (Spring 1987), pp. 37-51 -

Ray, Edward John. “The Determinants of Tariff and NontariffTrade Restrictions in the United States,” Journal ofPolitical Economy (February 1981), pp. 105-21.

“Survey of Automotive Trade Restrictions Maintained bySelected Nations.” Office of International Sectoral Policy,U.S. Department of Commerce, in hearings on FairPractices in Automotive Products Act before the Subcom-mittee on Commerce, Transportation and Tourism, March2, 1982, pp. 113-23.

Tarr, David C., and Morris E. Morkre. Aggregate Costs to theUnited States of Tariffs and Quotas on Imports: GeneralTariff Cuts and Removal of Quotas on Automobiles, Steel,Sugar, and Textiles, Bureau of Economics Staff Report tothe Federal Trade Commission (December 1984).

U.S. Congress, Congressional Budget Office. The GATTNegotiations and U.S. Trade Policy (GPO, June 1987).

U.S. Department of Commerce, Bureau of the Cen-sus.Statistical Abstract of the United States: 1988 (GPO,1987).

U.S. International Trade Commission. Qperation of the TradeAgreements Program—39th Report, 1987 (USITC, July1988).

FEDERAL RESERVE BANK OF St LOUiS